Wage hike costs Ontario restaurateurs $255 million

April 5, 2010, Toronto – As Ontario’s eight per cent hike in minimum wage took effect last week, foodservice operators will start paying an extra $255 million in wage costs annually, reports the Canadian Restaurant and Foodservices Association (CRFA).

This minimum wage increase comes on the heels of Ontario’s budget announcement, in which the government froze its own payroll costs.

“In this tough economy, the government realizes the need to control its own wage costs, but has no reservations about imposing a huge hike on Ontario restaurant payrolls,” says Stephanie Jones, vice president for the Ontario division of the CRFA.  “I have received an overwhelming number of calls and emails from restaurant operators outraged by this unfair minimum wage increase, asking how the government could ignore their suffering businesses.”

Ontario’s $23 billion restaurant industry employs 400,000 people, creates thousands of spin-off opportunities, and provides jobs for one in five young people.

“An eight per cent increase in minimum wage when inflation is just 0.4 per cent will force up all wages in our industry, leaving restaurant owners with no choice but to cut hours and jobs,” says Jones.  “At a time when we are trying to grow employment and rebuild our economy, dramatic minimum wage increases are entirely counterproductive.”

Ontario restaurants have existed on the second lowest pre-tax profit margin and paid the second highest minimum wage in the country.  This increase puts Ontario passed Nunavut for the highest minimum wage in Canada.

Through letters, meetings and more than 1,600 petitions delivered to the government, CRFA proposed these solutions:

•    Slow the scheduled increases in minimum wage to be more in line with other economic indicators like CPI.
•    Freeze the liquor server and student minimum wage differentials, recognizing the significant extra income earned by liquor servers and holding wages for students at 2009 levels.